What is an EIN Number, and How Do I Get One?

EIN Basics: Secure Yours Effortlessly in Simple Steps.

Introduction To EIN

Employer identification number (EIN): An EIN is a unique number granted to a company that makes it easy for the Internal Revenue Service (IRS) to identify it. EIN typically consists of nine digits and is given in the format XX-XXXXXXX.

Employers often need EINs to report income taxes. EINs are available for businesses to apply directly from the IRS and are typically issued instantly. An EIN is sometimes referred to as a Federal Tax ID Number. 

EIN is for businesses, while SSN is for US individuals. Although, not all firms require EIN. It's essential for handling your company's taxes and paying personnel. EINs are used on state tax forms and are provided by the state where the corporation is registered. 

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Does your business need an EIN?

The first thing you do after incorporating your business is apply for an EIN. 

Businesses of all kinds are eligible to apply for and receive EINs. This implies that individuals with a single employee have the same eligibility for an EIN as large organisations. The IRS mandates that some businesses obtain an EIN as part of their reporting obligations. An entity is required to apply for and obtain an EIN if it:

  • Has personnel
  • Runs as a corporation or a partnership
  • Files tax filings related to employment, excise, alcohol, tobacco, and guns.
  • Are associated with several kinds of organisations, such as trusts, estates, and nonprofits.
  • You need to file for bankruptcy
  • Have a Keogh plan or solo 401(K) retirement plan
  • Withhold taxes on income paid to NR.

In addition, trusts established by estate funds and representatives of an estate managing a business after the owner's death are required by the IRS to have an EIN.

In general, those operating small enterprises out of their homes, independent contractors, freelancers, and persons with side occupations who take advantage of the gig economy are exempt from needing an EIN.

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How To Apply For EIN?

The Internal Revenue Service offers a free EIN application process. The IRS website allows you to apply online, and you will receive your EIN in a matter of minutes. To apply online for a business EIN, follow these steps.

Determine Your Eligibility

  • You can register for an EIN online if the United States or any of its territories is your primary business place.
  • The online applicant must have an active Taxpayer Identification Number (TIN, EIN, or SSN).
  • You are limited to one EIN per responsible party per day.

Note: The individual who ultimately owns or controls the entity or has ultimate effective control over it is the "responsible party". The responsible party must be an individual, only an entity if the petitioner is a government body.

Online Application

  • This application cannot be saved and returned at a later time, so you must finish it in one sitting. 
  • After fifteen minutes of inactivity, your session will expire, and you must restart.

Submit Your Application

You will receive your EIN right away upon completion of all validations. Once downloaded, your EIN confirmation message can be saved and printed.

Documents Needed To Get EIN Done?

  • Proof of address
  • Proof of identity
  • PAN card of the owner
  • Passport-sized photos of the owner
  • Proof of address for the business that you have applied for
  • References

Additionally, you can apply for an EIN by phone, mail, or fax.

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Perks Of Having An EIN

An EIN is necessary for many business operations as your company grows, even though many small enterprises run without one. These are some of the most frequent explanations for why obtaining an EIN is necessary.

Helps Avoid Identity Theft

Your personal and business funds can be kept apart using an EIN. It prevents fraudsters from stealing your assets and saves your Social Security Number for private use. The IRS advises against utilising your Social Security Number unless you are an employee-free business with a basic organisational structure.

Helps You Open A Business Bank Account

Most businesses need an EIN to create a business bank account. Also, many banks need EIN to give out loans to businesses and issue credit cards.

Apply Licenses And Permits

When applying for a business licence, permit, or other necessity, use your EIN.

Boost Credibility

Having an EIN makes you appear like a trustworthy individual dedicated to your company.

Each business is assigned a unique EIN & as EIN is a pre-requisite for filing a business tax return (Form 1120), it is important to avail one. Even if the original employer closes their doors, the EINs never expire and are never redistributed to another company. 

Companies that alter their ownership composition must submit a new EIN application. For instance, sole proprietors need to file for a new EIN if they intend to incorporate their firms.

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Conclusion

An EIN is instantaneously available upon applying online. The IRS can receive an EIN application by fax, although it may take up to two weeks to complete. Applications submitted by paper mail are also accepted by the IRS, although a four- to five-week turnaround time is stated. 

Get help from Inkle Tax to prepare your paperwork for a seamless and timely tax filing process.

A distinct nine-digit number allotted to a company organisation is known as an employer identification number (EIN). To file taxes, every company needs an employer identity number. Fill out Form SS-4, which can be found on the IRS website, to request an EIN. The term "tax identification number," or "TIN," more widely used to refer to any identification number, should not be confused with the EIN. Thus, a specific type of TIN is an EIN. 

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